Dark Forecast for Twitter’s U.S. Growth, Says eMarketer

Twitter’s era of rapid growth at home is behind it, according to new projections from research firm eMarketer.

At present, one-fifth of U.S. Internet users access Twitter at least once a month, a user base that was accumulated during years of explosive growth. But in a study released Thursday, eMarketer said it expects the growth rate to slow considerably, from 19.4% in 2013 to below 10% in 2015, and slowing further to 6.4% by 2018.

Four years from now it estimates 64.9 million Americans, or about a quarter of the U.S. online population, will be logging into the short messaging service. Facebook’s audience is already twice that size today.

The numbers underscore what Twitter has already realized: If it wants more users–enough to become the “global town square” as CEO Dick Costolo often says–it’s going to have to work for it.

Twitter’s first quarterly results as a public company earlier this month showed that it added just 3.8% more monthly active users in the three month period, bringing its worldwide tally to 241 million for the last three months of 2013. It represented a considerable slowdown from the 6.4% growth in the previous period.

On the earnings call with analysts, Costolo said the company will devote more attention to the slowing growth rates with plans to make the service easier to use for beginners. EMarketer said its forecasts didn’t take Costolo’s statements into account.

EMarketer’s numbers are also less flattering than those provided by Twitter. The research firm estimates there were about 43.2 million monthly active users in the U.S. last year. Twitter said it had 54 million as of the end of 2013. While eMarketer said its figure takes Twitter’s official tally into consideration it also relies heavily on data drawn from a mix of external surveys, which strips out business accounts, multiple accounts held by the same user and spam accounts.

Twitter estimates false or spam accounts represent less than 5% of monthly active users and excludes them from its final count. EMarketer said that survey data indicates that the percentage of such accounts is higher than 5%. In addition, it only counts users who consistently sign in each month over the course of an entire calendar year. Twitter’s calculations are based on a quarterly average of users that log in at least once a month.

A Twitter spokesman declined to comment, saying the company doesn’t comment on outside research.

“A maturing user base means that steep growth is in the rear-view for Twitter in the U.S.,” eMarketer wrote in its report.

Twitter has gained the most traction among 18-24 year olds, with about 37.4% of the age group logging in, according to eMarketer. Going forward, it predicts older users will drive more of the growth simply because “there’s more room to grow,” said Dan Marcec, a spokesman for eMarketer. User penetration among 35-44 year olds will increase 7.6 percentage points to 29.1%, by 2018, the biggest jump of among all age groups.

A silver lining: eMarketer says older users are more likely to engage with ads, significant because it is the primary way Twitter earns revenue.

“A well-established user base can also be a less volatile user base, and Twitter’s maturing users not only in numbers but also in age could influence its advertising revenue potential,” said the report.